Ian A. Gentis
Monday, May 14th 2012
While the science of global warming is being debated, there is no doubt about a new metric coming to your supply chain: the carbon footprint. The measurement of greenhouse gas (GHG) emissions has become another plank in companies’ Corporate Responsibility platforms, and there is a good chance that you will be asked to provide your carbon footprint data in your next RFP response.
Here’s good news: Companies large and small that have decided to focus on reducing greenhouse gases as responsible policy, are finding out that they can save money.
The basic approach is to conduct a study of the carbon footprint of your supply chain as part of your product life cycle analysis (LCA).
Here’s some bad news: There is a lot of “junk science” and snake oil being offered up and some companies making honest efforts to understand their carbon footprint have had poor results.
Over the course of the next several blogs, we’ll explore the progress being made, offer resources and suggestions, and help you navigate through the hype to reach your goals.
So what is this all about? A definition of carbon footprint
Our friends at Carbon Trust (www.carbontrust.com) in the United Kingdom (UK) helpfully offer this definition:
A carbon footprint measures the total greenhouse gas emissions caused directly and indirectly by a person, organization, event or product.
A carbon footprint is measured in tonnes of carbon dioxide equivalent (tCO2e). The carbon dioxide equivalent (CO2e) allows the different greenhouse gases to be compared on a like-for-like basis relative to one unit of CO2. CO2e is calculated by multiplying the emissions of each of the six greenhouse gases by its 100 year global warming potential (GWP).
A carbon footprint considers all six of the Kyoto Protocol greenhouse gases: Carbon dioxide (CO2), Methane (CH4), Nitrous oxide (N2O), Hydrofluorocarbons (HFCs), Perfluorocarbons (PFCs) and Sulphur hexafluoride (SF6).
There are two types of carbon footprinting
The main types of carbon footprint for organizations are:
1. Organizational carbon footprint
Emissions from all the activities across the organization, including buildings’ energy use, industrial processes and company vehicles.
2. Product carbon footprint
Emissions over the whole life of a product or service, from the extraction of raw materials and manufacturing right through to its use and final reuse, recycling or disposal.
To get to a carbon footprint of the supply chain we will draw on both types of footprints.
What outputs can I expect from a carbon footprint? Some examples of carbon footprints
Let’s take a look at a recent carbon footprint study at Sprint Nextel (To review and download the full study, registration is required, but is free).
Sprint Nextel spends $13.5B annually on the 162 suppliers in its supply chain. Economic consultants Trucost (www.trucost.com) conducted a supply chain carbon footprint. A summary of their findings:
The carbon footprint of the Sprint Nextel supply chain is very concentrated in a few suppliers.
• The top 5 suppliers contribute to 58% of the total carbon footprint of the supply chain.
• The top 50 suppliers account for over 94% of the total carbon.
• Manufacturing is the most carbon intensive sector, accounting for 83% of the total carbon emissions and 67% of the expenditure.
• A total of 121 suppliers from Sprint Nextel’s supply chain are located within the top three sectors.
What can I do with this information? Make plans to reduce your carbon footprint
Turning again to the Trucost Sprint Nextel study:
Measuring and understanding carbon footprints is the first step to towards managing and reducing them. Sprint Nextel can play a role in promoting emission reductions in the supply chains of its suppliers:
Develop low-carbon procurement strategies:
• An understanding of the main sources of emissions within supply chains could inform low-carbon procurement strategies.
• Baselines can be used to set carbon reduction targets for procurement.
• Include a requirement in tenders for suppliers to report carbon emissions data. Greater transparency can help identify opportunities to reduce emissions and demonstrate improvements in carbon performance.
• Carbon prices can be applied to emissions data to inform procurement decisions.
• Identify opportunities to monitor and share cost savings achieved through improvements in energy and carbon efficiency with procurement.
Inform engagement with suppliers:
• Identify the companies and sectors where engagement could be most effective to reduce supply chain emissions.
• Engage with suppliers that contribute most to carbon footprints, and are carbon-intensive compared with sector benchmarks, to encourage improvements in carbon efficiency.
• Ask suppliers to develop action plans to manage GHG emissions and monitor their performance. Encourage them to focus on improving the efficiency of fuel and electricity use so that they benefit from both carbon and cost savings.
For further reading, here is an interesting white paper from our friends at Carbon Trust which is no longer hosted on their website. (Understanding & Optimizing SC Carbon Footprints PDF)